On the face of it, Gov. Josh Shapiro’s surprise announcement that he would give SEPTA an extra $153 million seemed like a straightforward decision.
The money was just sitting there, waiting to be spent on future highway projects, and SEPTA desperately needed it to avoid a huge fare hike and potentially devastating service cuts that could put the agency on a “death spiral” toward irrelevance, according to SEPTA, local elected officials, and transit advocates who supported the move.
Shapiro’s press conference at the Frankford Transportation Center last Friday, where he made the announcement, could be fairly described as a lovefest, with speaker after speaker extolling the importance of SEPTA to the state’s economy and praising the governor for acting to shore it up.
Afterward, though, there were some nagging questions.
If the option of “flexing” federal highway money to transit was always there, why didn’t Shapiro do it earlier and prevent all the consternation in Philly of the preceding several weeks? When did he decide to do it, and why? How did he get the idea? Is this an unorthodox move or a pretty conventional one?
What do state Republican leaders, who rejected Shapiro’s previous transit funding proposal, think of his decision? What are the politics of the move and how will they affect future negotiations over state transit funding?
We asked around and, though we weren’t able to answer all those questions, we got a better sense about what happened and what might come next. Here’s what we found.
Flexing since the ‘80s
There’s a notion that federal transportation dollars for transportation projects get split 80% for roads and 20% for mass transit, based on an agreement made on gas taxes in the early 1980s.
But transit has never actually gotten that much total funding from federal programs, and there’s no requirement that the contracts that states give out for roads, bridges, rail cars, buses, and other infrastructure projects stick to an 80/20 rule.
In fact, states have been “flexing,” or transferring, federal money since at least the ‘80s, when people around the country were revolting against highway construction projects and pushing for expansion of transit instead, said Alex Armlovich, a housing and transit policy analyst who was involved in pushing Shapiro to flex.
“People are like, oh, the 80/20 highway split from the federal government, that’s written in the Bible. Nothing you could do about it,” said Armlovich, who is with the Niskanen Center think tank in Washington, D.C. “And it’s like, no, no, this is a federated democracy. We actually have tons of choice.”
“A brave and wily choice”
Is Shapiro’s decision to move the money a heroic step, a rare emergency measure, a ho-hum budget maneuver, or something else?
The answer depends on who you ask. In a press release sent out Friday, the governor’s office described it as “a standard practice in Pennsylvania and across the nation.”
However, it hasn’t happened here in a significant way since 2005, when then-Gov. Ed Rendell sent more than $400 million to SEPTA and other agencies to prevent fare hikes and service cuts, per Spotlight PA. He also flexed $45 million to Pittsburgh’s transit agency in 2010.
Other states don’t do much flexing, either. From 2013 to 2020, they collectively transferred less than 4% of their federal highway funds to transit, according to TransitCenter, a New York advocacy organization.
“Unfortunately, it’s still a relatively neglected tool, even though there are now set formulas and set pieces of paperwork that you could follow to engage in it,” Armlovich said.
RELATED: Shapiro “flexes” $153 million to support SEPTA into 2025
The biggest flexer by far was New Jersey, at 15%, followed by California, Maryland, Oregon, Vermont and New York. Pennsylvania was in 17th place, flexing a little more than 2% over that period.
Armlovich said he would describe Shapiro’s move as “a brave and wily choice,” while Anselm Sauter, a lobbyist for the Chamber of Commerce of Greater Philadelphia, called it “exceptional.”
When word of a possible flex began to circulate in political circles, Sauter said he heard it was not going to be big enough to fill SEPTA’s entire budget gap for the current fiscal year.
“So $153 million was an eyebrow-raiser,” said Sauter, the chamber’s vice president for regional advocacy. “It was a big jump from what I think some people probably expected.”
Transit nerds, activate!
Sauter said he and his colleagues started hearing about the flex option as early as this past summer, when it began to seem like the legislature would not include a transit funding boost in the state budget.
But even into the fall, as SEPTA sent out increasingly urgent messages about its looming crisis, “we heard that the governor was not positioned to do it,” he said.
In late September, Armlovich was posting on Twitter/X about a proposed highway project in New York’s Catskill region and noted that governors can flex federal highway funds to transit. He said Inquirer writer Dan Pearson reposted the comment, and Philly urbanist Jon Geeting saw it and contacted Armlovich.
Geeting penned an editorial about flexing and asked Armlovich to sign on as co-author, but they held off on publishing until it was clear that negotiations between Shapiro and the legislature over increasing transit funding — whether from sales taxes or a new gambling tax — weren’t going anywhere.
On Oct. 28, the Inquirer ran the editorial. The idea got picked up by the Transit For All PA! and Transit Forward Philly advocacy coalitions, and by legislators representing Philadelphia. Nicole Brunet, who does policy work for Transit for All PA and the Bicycle Coalition of Greater Philadelphia, said thousands of concerned residents contacted Shapiro, urging him to act.
“In the last week and a half, we launched a campaign directly to the governor’s office and generated 3,000 actions,” she said Friday. “We also generated 2,500 calls to the governor’s office. Those are just what we recorded — it’s very possible that those numbers are even larger.”
That grassroots support “gave the people in power, the people that could make the decisions, the confidence that riders really wanted to see action happen quickly,” Brunet said.
After a long wait, a sudden pivot
As late as Nov. 19, it was still unclear if Shapiro was on board. At an unrelated event in Philly he said, “We’re working hard to consider what steps we can take to shore up SEPTA,” and his administration would “have some more to say on that over the coming weeks.”
He seemed to dismiss flex funding, describing it as only a “stopgap measure,” not a long-term solution to the transit budget puzzle.
But two days later the Philadelphia City Council passed a resolution asking Shapiro and the Delaware Valley Regional Planning Commission to flex funds, and that afternoon the governor’s office announced a last-minute press conference regarding SEPTA the following day.
So were Geeting and Armlovich responsible for saving SEPTA?
“No, I don’t think so,” Geeting said Friday. “The governor and everybody else kind of worked this out,” and the advocacy coalitions turned it into a political action opportunity. “It took a lot of people, but I think our op-ed had a role in kind of kicking it off.”
And if they hadn’t written that op-ed, would someone at the governor’s office or PennDOT have eventually proposed flexing the highway funds?
“My hope is that deep in the bureaucracy, there’s someone who’s still there who remembers [Rendell flexing], and so my hope is that that would have filtered up from a longtime staffer,” Armlovich said. “But I’m not sure.”
The five counties where SEPTA operates — Bucks, Chester, Delaware, Montgomery, and Philadelphia — are also upping their contribution to the agency, according to Monica Taylor, chair of the Delaware County Council.
Together, they arel “securing over an additional $20 million of local funding to continue to keep SEPTA running smoothly,” she said at the press conference Friday.
Montgomery County officials said they’re increasing their contribution by $1.1 million, from $8.3 million in 2024 to $9.4 million in 2025. It’s unclear how much the other counties will individually contribute.
Under the state’s funding scheme for SEPTA, the counties together provide a 15% match of the state’s contribution. In 2023-2024, they together gave close to $123 million, according to an agency budget document. Philadelphia provided the most by far, at nearly $101 million.
SEPTA was not able to immediately provide the new local subsidy figures Wednesday.
“SEPTA staff has begun reaching out to each of our county funding partners to discuss local match, but it is our understanding that the local funding commitments the counties have already made – as part of the FY2025 SEPTA budget, which anticipated additional state funding – will accommodate the money the governor has flexed,” a spokesperson said.
Republicans aren’t having it
When Rendell flexed funds two decades ago, Republican legislators got mad that he was, at least on paper, unilaterally taking money from their districts’ road projects to fund urban transit. One lawmaker proposed banning the practice.
Shapiro’s flex is getting a similar response this time around. Senate President Pro Tempore Kim Ward, a Republican, faulted Democrats for prioritizing what she described as a misplaced education funding boost instead of transit. Rep. Seth Grove, of York County, posted a list of the affected highway projects and said Shapiro “stole money” from them.
Two other top Republicans, Senate Majority Leader Joe Pittman and Senate Transportation Committee Chair Wayne Langerholc, wrote Friday that Shapiro and Democrats “have chosen to politicize and pillage critical infrastructure projects for other districts which are well outside of SEPTA’s reach, ironically, the majority being in Republican districts.”
How will that criticism be reflected in state budget negotiations next year — when SEPTA will again try for a permanent funding increase to erase its $240 million annual deficit, and money will be needed to backfill the affected highway projects and possibly spend more on roads generally?
Armlovich said it was encouraging, at least, that Republicans weren’t calling for defunding SEPTA, but rather for a different approach from the governor.
While Democrats blame Senate Republicans for not acting on any type of funding fix for transit, the Republicans’ comments suggest they think Shapiro was at fault for not bringing them a proposal they could realistically support — for example, one that’s paid for out of a new tax or funding source — rather than just draining the state’s reserves, as they argue the governor’s budget plan would have done.
“The governor made a fairytale wish list to sizably increase SEPTA funding absent legislative involvement,” and SEPTA made the “troubling decision” to rely on that list in its budget, Pittman and Langerholc wrote. “We will not apologize for being fiscal stewards of tax dollars.”
Or as Pittman told the Inquirer this week, “If the governor and House Democrats feel they need to use us as a scapegoat, so be it. But the reality is, it takes all parties to come to the table to identify solutions to the issues.”
An increase in the local funding share, beyond what the counties are already promising, could also be an important part of the negotiations and a way to prevent future funding crises, Armlovich said. Bills that would allow local jurisdictions to create new local taxes to fund transit have been proposed but never approved.
“It makes sense that giving some fiscal autonomy to the SEPTA region should be part of a funding deal, so that locals can have both the accountability and skin in the game, essentially, so that every time this happens, you don’t have to go back to Harrisburg,” he said.